SoftBank-backed construction startup Katerra is to shut down, after receiving more than $2 billion in funding.
The company told employees it will be shutting down operations, according to a report in The Information. Last year Katerra claimed it employed more than 8,000 people around the world and said it was working in countries including the United States, India and Saudi Arabia.
The Menlo-based company struggled to make a viable business out of its concept of cheaply building properties for real estate developers. Executives blamed rising labor and material costs as a result of the pandemic.
In December last year, SoftBank Group reportedly invested $200 million to bail out Ketarra. The funds saved the company from bankruptcy, and added to the roughly $2 billion SoftBank had already pumped into Ketarra. Other investors in the company include Khosla Ventures, Greenoaks Capital, Celesta Capital, and DFJ Growth.
And that was not the first bailout. In May 2020 the startup received another $200 million from SoftBank in order to get its finances in order. In 2018, when the company raised $865 million, Ketarra claimed bookings for $1.3 billion worth of commercial and residential construction projects. But the next year Kattera said it would cut 200 jobs and shut down a factory in Phoenix, claiming it was concentrating on a more automated facility in California.
Ketarra used the enormous sums of investment to grow quickly, partly by acquiring smaller construction companies. But integration proved tricky, and the company faced construction delays and issues trying to perfect its modular approach.
Katerra now becomes SoftBank’s most high-profile failure since WeWork’s failed IPO attempt in 2019. CEO Masayoshi Son labeled Katerra as one of his “regrets” last month, in an interview with Barrons.